Ex­perts op­ti­mistic about growth too

7 Days in Dubai - - BUSINESS - @Ma­hakLFC

The rate of in­fla­tion in the UAE is ex­pected to re­main largely steady in 2017, ac­cord­ing to the In­ter­na­tional Mon­e­tary Fund.

In their World Eco­nomic Out­look re­port for 2016, the IMF stated that UAE GDP is ex­pected to grow from 2.3 per cent in 2016 to 2.5 per cent in 2017 whereas the in­fla­tion rate is ex­pected to de­crease by 0.5 per cent from 3.6 per cent to 3.1 per cent.

Faisal Has­san, Head of In­vest­ment Re­search at Kamco, which au­thored a re­port on the Mid­dle East find­ings, said: “This is not a ma­jor change, prices of com­modi­ties are ex­pected to re­duce if not stay mar­ginal in the UAE.

“In­fla­tion right now is very be­nign, in the UAE it is fore­casted to stay be­tween 3.6 per cent to 3.1 per cent which means it will be flat, and we can ex­pect to feel a slight de­cline too,” he added.

There are three key rea­sons for the de­cline, ex­plained Has­san.

He said: “The oil prices have an ef­fect, since most of the com­modi­ties are im­ported in the UAE. The global fall in price of com­modi­ties is a con­tribut­ing fac­tor and the real es­tate prices in UAE have not gone up ei­ther.

“From the out­look of an in­di­vid­ual, this is pos­i­tive. The non-oil GDP in UAE is ex­pected to grow as the coun­try looks to con­cen­trate on By Ma­hak Man­nan other mar­kets like fi­nan­cial ser­vices, in­dus­trial sec­tor, health­care and ed­u­ca­tion.”

How­ever, An­drew Prince, fi­nan­cial plan­ner at deVere Acuma said the in­fla­tion num­bers do not rep­re­sent the real story. “Gen­er­ally, when you have a higher GDP, there is higher in­fla­tion,” he said.

“In the next 12 months there is go­ing to be plenty of hous­ing avail­abil­ity, so hous­ing is go­ing to be sub­dued and there will be con­sis­tency in the mar­ket, but that is if you don’t have chil­dren and you do not have to worry about ed­u­ca­tion.

“Take an­other ex­am­ple, if you are a low-paid worker who earns around Dhs3,000 to Dhs4,000 a month and rent goes up by Dhs100, if you are earn­ing Dhs10,000 a month it does not sound much - but to that in­di­vid­ual it is a lot.

“A client of mine has four kids and their school fee has gone up more than 15 per cent.”

He added: “There are lots of pos­i­tives to come for the UAE econ­omy af­ter 2016, which has been a year of uncer­tainty, but the num­bers do not tell the per­sonal story.”

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